my views on the local news in Minnesota

Taxes

October 19, 2008

With gas tax revenues declining with more fuel efficient vehicles
and less driving, governments are looking for ways to increase their
revenues. In Texas, some counties have been invited to participate in a study
where GPS devices will be placed on participants' vehicles, to measure
their mileage. Then the government will send them a "make believe bill"
to show them how much they might be taxed under the proposed mileage
tax.

Just think of it: if this mileage tax becomes law in your part of
the country, you will have the opportunity of paying more in taxes even
though you're using less gasoline, at the same time that the government
will have records of where you've been at any given moment.

August 13, 2008

Two democrat senators asked the GAO to prepare a report comparing tax liabilities of foreign and US controlled corporations. The results, as reported in the media, have nothing at all to do with any comparison of foreign vs. US controlled corporations. Instead, it is being used to pound those evil corporations.

Senator Dorgan called the conclusions “a shocking indictment of the current tax system”. “It’s shameful that so many corporations make big profits and pay nothing to support our country. The tax system that allows this wholesale tax avoidance is an embarrassment and unfair to hardworking Americans who pay their fair share of taxes. We need to plug these tax loopholes and put these corporations back on the tax rolls,” Dorgan said. “It’s time for the big corporations to pay their fair share.”

“This report makes clear that too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States,” said Senator Levin.

If you actually plow through the report, if you have the fortitude to read the boring text and statistics, you will not find anything at all in it that says that there are corporations making "big profits" while paying "nothing to support our country."

This is nothing but wholesale political rhetoric, so it is a great disapointment to me to see that taxprofblog.com choses just to quote the rhetoric without actually reading the report.

If you actually read the report, you might wonder, as I did, why so many businesses in our country can't make a profit.

You might conclude that the reason that these corporations haven't been liable for any income taxes is either that (a) after subtracting expenses, they didn't make a profit; (b) they were an S Corporation, where the profit is taxed at the individual shareholder level and will not show up on the corporate tax return; (c) Congressional "loopholes" allowed them to claim that they had no profits; or (d) they're just cheating.

Unfortunately, the report did not contain enough data to be able to explore any of these possibilities. Which means that it can't honestly be used to support the "shocking indictment" complained of by Democrat Senator Dorgan. Ho hum. What else is new in politics?

Meanwhile, we are treated to AP reports that don't distinguish between gross sales and profits,and even quote a Cato expert without having the slightest idea what his words actually mean.

Never mind that corporations employ many people in this country, thus giving them an income to pay their rent, their income, property, sales and gasoline taxes, FICA and medicare taxes, and perhaps have something left over for food, the employers pay mucho bucks in payroll taxes, not to mention all of the other taxes these corporations pay. .. .

But I guess there's no political mileage in speaking the truth, at least if you're a Democrat.

August 11, 2008

Ironically, the IRS has been trying to encourage more and more taxpayers to e-file. If this Canadian report reflects what's happening down here too, that may be resulting in unintended consequences for the IRS.

May 01, 2008

we've tried windfall profits taxes before, in the early 1980s, and
they were an utter failure. As the Congressional Research Service
found, revenues produced for the government were nearly 75% below what
was expected. Meanwhile, domestic oil output fell 8%, while oil imports
surged 16%.

That's just poor policy, and even worse economics.

Remember: Oil companies don't really pay "windfall profit" taxes,
anyway. You do. Some 50 million Americans today own oil company stock,
either directly or through 401(k)s and mutual funds. Don't be suckered:
"Windfall profits" taxes come right out of your retirement account, not
out of the oil industry's business.

Oh sure, Big Oil's profits are up. But so are the taxes they pay. In
2006, that came to $90 billion — up 334% in just four years.

This is how Clinton-style populism works. It starts with ignorance and ends with serious damage to our economy.

Oil prices aren't high because profits are up; they're high because
we don't have enough oil. By clamping down on drilling, refusing to
move forward on nuclear energy and hitting producers with punitive
taxes, Congress is doing all it can to ensure we don't have enough in
the future.

April 14, 2008

We have to cough up some dollars to the Dept. of Revenue this year. Good reason to wait to file.

In finalizing our returns I came across some language in the instructions that left me scratching my head. On Form M60, which includes the voucher one must send in with one's tax payment, there is an eleven step calculation. Here's how I filled it out:

Since we're planning on sending the payment by April 15, 2008, line 1 is zero. Following the instructions exactly, I arrived at a zero amount for step 11.

In the next column, I am told that, "The amount on step 11 is your total tax."

That's funny, I thought we had to pay the amount on line 36 of the M1. Well, okay, I'm smart enough to know that you do really expect us to pay the amount on line 36 of the M1 so even though you're telling me that if I pay by April 15 I have zero tax due, I'll do my best to avoid trouble here and pay you what I think we owe.

Then I read the last paragraph of the Form M60 instructions and I'm not so sure I can figure out how to correctly pay our taxes after all:

Does this mean to send the payment in a separate envelope? If not, what on earth does it mean?

I tried calling the Dept. of Revenue to ask that question, and received the following recorded message:

We are experiencing high call volumes and have exceeded the capacity to provide a representative for you. . . . . . We apologize for this inconvenience. Please try your call again later.

September 02, 2007

If your cost is less than you budgeted for an item, fix the problem by buying more than you need so that all that budgeted money gets spent. That way, if your cost ends up being more than you budgeted for a different item, you can tell the taxpayers you have an emergency because costs are rising, and you need a tax increase.

According to ThisWeek Farmington, Farmington Public Schools did just that when it learned that printing the school district's calendar would take less money out of its budget than expected. Rather than saving the money to cover unexpected shortfalls in other areas, it printed and distributed more calendars.